Inside Citadel Securities’ six-week-long training for newbie traders, where playing poker and learning to fail are part of the job
- About 200 college grads joined Citadel Securities and its sister hedge fund this year.
- Before the traders start work, they must undergo an intensive, 6-week training course.
- A recent MIT grad on the options desk broke down her daily routine from 8 a.m. to 6 p.m.
Most corporate jobs start with a few days of onboarding — a week if you’re lucky. A rookie mistake in finance can literally cost a company millions of dollars, so training juniors can take extra time and diligence. Citadel Securities, one of the world’s largest trading firms, is taking this thoroughness to a new level by requiring new traders to complete six weeks of academic coursework, technical training modules, and mock-trading simulations before they’re allowed to work.
Citadel, a hedge fund, and Citadel Securities, its sister market-making firm, were founded in 1990 and 2002, respectively, by billionaire Ken Griffin. They have grown to be some of the world’s largest financial institutions in recent decades. They have also become a magnet for top talent, owing to a competitive work culture and generous employee benefits, such as an all-expenses-paid trip to Disney World in 2022.
This work-hard, play-hard culture can be seen in the firms’ training of new employees, including those in the most junior positions. Every year, new hires are put through rigorous training before beginning their actual jobs. This year, over 200 new hires began roles in investing, quantitative research, engineering, trading, and enterprise across the two firms.
Insider spoke to a new trader during her training, a senior options trader, and the program’s director in an effort to take readers inside the firm’s intensive training program. They explained why the program is so lengthy, what it entails, and what a typical day looks like. They also described how Citadel’s newest employees are treated like royalty, including Midtown apartments for out-of-town trainees, catered meals, a trip to the New York Stock Exchange to ring the opening bell, and face-time with the firm’s top leaders, including Griffin.
The program, which began in September and ended at the end of October, provides new traders with “the basic building blocks and tools to come to Citadel Securities and be able to navigate the landscape of the business,” according to Pete Becker, director of Citadel Securities’ early careers trading program. As a result, “understanding where institutional knowledge lives, what the different strategies are, how we pursue our role in the market, and then more holistically, we ask them to make a lot of decisions and choices that are very difficult without everything they need to make a complete perfect decision.”
Job and training requirements
Citadel Securities’ new hires from all divisions (quantitative research, technology, and trading) gathered for educational sessions on topics such as ETF fundamentals, the anatomy of an exchange, and how to be a market maker during the first week of the program. Griffin also gave a fireside chat about what it means to take ownership of your career, the risks of complacency, and taking risks not just in markets but with people. They also had a Q&A with Citadel Securities CEO Peng Zhao, who discussed how to prioritize time and find ways to be a leader, among other things.
The format and length of the onboarding process vary from there. Incoming traders receive the most extensive and meticulous training. They hold lectures on asset class fundamentals as well as modules on data analysis and trading tools. They also spend hours coding and collaborating in small groups for a three-week long multi-stage mock trading competition.
The training program hasn’t always been this comprehensive. It’s Becker’s fourth year in charge, and one of the biggest changes in recent years is that the training is now entirely led by the firm’s own full-time traders and employees — no outside, third-party training companies.
“We try not to talk to people all the time.” “It’s hands-on and interactive,” Becker added.
They do this in part by playing games after their formal training sessions for the day, such as poker and other turn-based trading games that aid in decision-making and strategy.These games assist managers in gaining a better understanding of their future talent. Joe DeNotta, who leads the options market-making team and is involved in the training, recalls being particularly impressed by Olivia Fan during the recent training session.
“She and others were playing a turn-based trading game in which each participant’s decisions or choices could really change the strategy of the follower,” DeNotta went on to say. “I thought one of the interns upstream of Olivia made a poor decision.” Olivia quickly punished them for their decision, while simultaneously making the decisions of the participants who followed her much more difficult.”
“She had an extremely concise but specific and exacting answer,” DeNotta said when he asked her about the move. “That made it clear to me right away that she was very confident and knew she had made the best decision, and she knew exactly why.” This was something we had just discovered. “Right away, I found that interaction to be quite impressive.”
According to DeNotta, the games also serve as a training opportunity. “We like to take those moments as an opportunity to pause and discuss what happened, and make sure that the person who would’ve been in Olivia’s seat was making the decision for the right reasons, that their process was sound, and also to coach the others about what had happened.”
Why is the training so lengthy?
Even for Citadel’s new hires, who typically come from top universities, there are some aspects of the trader’s job that aren’t always intuitive, according to Becker.
“We hire extremely talented, bright students out of school, but we need to appropriately leverage their abilities in order for them to become successful traders,” he went on to say. “There isn’t a class at Harvard or MIT or other schools that covers trading.”
DeNotta added that, in addition to the more obvious qualities of reasoning, communication skills, and competitiveness, their traders must be collaborative, resourceful, and skilled at creative problem solving.
Many recent graduates must also learn how to fail.
“There is a level of resilience required.” We tell our employees to embrace intellectual discomfort, and I advise them not to waste time and energy resisting failure. This business will hand you failures — a lot of them — and that’s a new experience for many people who come here.”
Becker believes that technical training is important, but that teaching juniors to develop a trader’s mindset is more important.
“We place a premium on the decision-making process rather than the specific outcome.” “We discuss behavioral economics and decision biases a lot,” he said. “Rather than thinking, ‘a trade I made money on was good, and a trade I lost money on was bad,’ we want them to think about the process of the trade and the rationale for the decision.”
Managers benefit from the training as well.
“Everybody is exceptionally talented, but they aren’t all exceptionally talented in exactly the same ways,” DeNotta said in a statement. “Within the class, there are relative strengths and weaknesses. We need to use that data to figure out how to put each person in the best position to succeed. It’s all about determining where they’re most likely to have the most impact early in their career.”
A Day in the Life
Fan, who studied math and computer science at MIT, took Insider on a tour of a typical day at the market maker.
Arrive at the office at 8:30 a.m.
“I usually take the subway to work and get there around 8:30. We spend about 30 minutes eating breakfast, which is provided in the office, and catching up with the other employees on how their previous days or weekends went.”
Education Session begins at 9 a.m.
“Depending on the day, we usually have some sort of education starting at 9 a.m. Pete brings in various engineers or traders to give us lectures on topics such as asset classes, best practices in data science, and how the engineering side works.”
Mock Trading Competition Teamwork Practice 10:30 a.m.
“Following that, we’re working on a team competition based on a bogus electronic exchange.” We were divided into groups of three and spent the majority of the morning discussing which strategy to employ, reviewing and testing each other’s code, and conducting practice service sessions.”
12 p.m.: Lunch
“We usually stop working around 12, eat for an hour, and then relax for a while.” A catering company provides lunch. They have many good options. They usually have some sort of protein and a vegetarian main dish, a bunch of sandwiches, various desserts, and a ton of drinks. It’s very convenient and reasonably priced.”
Data Visualization Session at 1 p.m.
“Around one, we’ll do data visualization, where Pete and Andrew [who also leads the training curriculum] will provide us with access to a lot of data for looking at things like risk and P&L across a variety of assets.” And our job is to figure out what we think is important, interpret it, and create graphs that tell a story after being given this massive mountain of data. We usually do that for the majority of the afternoon.”
After-Hours Training begins at 5 p.m.
“After the full-timers finish trading for the day, we’ll have a gaming session for mock trading.” We’ve also spent an hour or so playing poker, explaining our decisions and getting feedback on what they think about them.”
The day begins around 8:30 a.m. and ends around 6:00 p.m. for traders. Almost every day consists of a mix of academic coursework, technical training modules, and mock trading simulations.
Fan is from New York and will work out of Citadel Securities’ Manhattan office. Out-of-town trainees, on the other hand, are housed in their own apartments in Midtown until training is completed, according to Becker. He added that while they are not in the same building, they are all within a 10-15 minute walk of the training office (which is separate but within walking distance of Citadel’s office).
Fan claims that the training has aided her in acclimating.
“I came in feeling kind of nervous about starting a new job,” Fan told me. However, she now “feels more confident and prepared than I did five weeks ago.”
Even after the six weeks of training are completed, the traders continue their education for several months, working on the desk during the trading day and doing additional training before or after market hours. They don’t start trading actual company capital for eight to ten months after they start, he says.
“Our campus hires are too talented to come here and spend six months answering phones and shadowing.” “I’d be very disappointed if I found out that someone sat here for a month feeling like they weren’t being used,” DeNotta said. “I want people to be challenged appropriately.” And I think what that really means is that they’re keeping these people at a point where they’re always feeling like they’re right where they shouldn’t be taking on anymore.”
